Spotlight Interview: Vamsi Bonthala, CEO Arbor Lodging Partners

VB: I knew I wanted to be an entrepreneur and start a business some day (it was the heyday of Internet 1.0 after all!), however, there was no particular industry that grabbed my attention. I was just attracted to the idea of “doing deals”, creating something, and learning a lot. As a result, I decided to focus on investment banking or law so that I could get exposure to transactions and different industries, and ultimately elected to go to law school.

VB: Prior to starting Arbor Lodging, I was a real estate and private equity attorney with large law firms in New York. I worked with very talented colleagues and driven clients while getting exposure to complicated transactions, but that side of the business was not for me. While I learned a lot, I was more thrilled by the calculated risk-taking I saw clients take as they closed deals and grew businesses and knew that I wanted to do the same. My co-founder Sheenal Patel, who came from real estate investment banking, shared the same desire to be on the principal side. By combining that desire with our interest in real estate and the hotel business, we were well on our way to what would become Arbor Lodging.

LD: Owning and managing Hotels is a blend of Real Estate and operating a 24/7 corporation that needs constant marketing, sales, customer care, and more. How do you design plans to operate new acquisitions equal to, or better than the previous owner/operator?

VB: Each hotel is different, so it’s all in the details. We underwrite every deal from the ground up so that we can determine an optimal operations strategy for the hotel. Further, since any business plan is only as good as its execution, we spend a lot of time post-acquisition analyzing our performance, challenging our assumptions, and making sure that our strategy stays consistent with the ultimate goals we set out for the acquisition. Additionally, beyond the numbers, we bring a strong focus on company culture and guiding principles to all of our new hotels. We believe that operating with purpose, supporting our employees, and taking care of our guests is just as important as good underwriting to the ultimate success of a hotel.

VB:Our ideal acquisition is not based on market or size. What gets us excited is an interesting story that is resulting in a dislocation in pricing, an opportunity to create value, and/or an asymmetric risk-reward profile. We often run toward the deals that others are running away from because of being too complicated or messy.

LD: Looking back what was your most significant transaction and why?

VB: Two significant transactions that come to mind are the Hotel Phillips Kansas City Curio Collection and the Doubletree Park City. In Kansas City, we executed an extensive renovation to restore one of the city’s iconic historic hotels to its former glory. In addition to doing a comprehensive renovation to the rooms, common areas, and mechanical systems, we also repositioned the restaurant and introduced two new F&B concepts, a speakeasy-style cocktail lounge and craft coffee bar. The hotel has won multiple awards including being named one of the most beautiful hotels in the United States by Architectural Digest. This transaction was significant because of the vision and scope of the undertaking, as well as the complicated financing structure (including historic tax credits) that we put together. In Park City, we acquired a heavily distressed independent hotel during the height of the recession. It was bleeding money and had extensive deferred maintenance. This transaction was significant because it pushed us to find success with limited resources – we were able to stabilize operations and make the hotel profitable through hard work in an extremely challenging economic environment.

LD: What advice would you give a young Vamsi Bonthala, just out of college and starting his professional career?

VB: I would give two key pieces of advice. First, don’t be afraid to ask questions. There is a fear that asking questions makes you look like you don’t know what you’re talking about, but often it’s the smartest people that are asking the most questions. Second, no matter what you decide to do for a career, get into the details. It’s easy to get distracted by the headline items, but focusing on the unsexy stuff is where value is created. I have found that many of the most successful people I know have a command of the details.

LD: What advice have you received that has been instrumental in your success?

VB: One piece of advice that has stuck with me is that very few things are permanent. If things are bad, there are always ways to improve the situation. And just as importantly, if things are good, it is dangerous to assume that they will always be that way.

LD: What does the future hold for both you and Arbor Lodging Partners?

VB: Arbor Lodging’s future is all about growth. This includes growth in assets under management, expertise, and team members, all while further aligning our growth with our core values so that we can make the most positive impact possible.

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